EXHIBIT 10.15.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of the 2nd day of December, 2002
(the "Effective Date"), by and between VENTAS, INC., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive desires to be employed by the Company and the
Company desires to hire the Executive; and
WHEREAS, the Board of Directors of the Company (the "Board") have
determined that it is in the best interests of the Company to enter into this
Agreement.
NOW, THEREFORE, in consideration of the promises and the respective
covenants and agreements contained herein, and intending to be legally bound
hereby, the Company and Executive agree as follow:
1. Employment. The Company hereby agrees to employ Executive and
Executive hereby agrees to be employed by the Company on the terms and
conditions herein set forth. Subject to the termination provisions hereinafter
provided, the term of Executive's employment under this Agreement (the "Term")
shall begin on December 2, 2002 (the "Commencement Date"), and shall end on
December 31, 2004. In the event Executive continues as an employee of the
Company after expiration of the Term, this Agreement shall nevertheless
terminate upon expiration of the Term and such employment thereafter shall be
"at will," except that the rights and obligations of the Company and the
Executive under Section 9 of this Agreement shall survive the expiration of the
Term or other termination of this Agreement.
2. Duties. The Company shall employ Executive during the Term as its
Senior Vice President/Chief Financial Officer. Executive shall report to the
Chief Executive Officer of the Company (the "CEO"). Executive shall have the
duties and responsibilities consistent with those of the chief financial
officers of other publicly-traded healthcare real estate investment trusts,
including without limitation the duty and responsibility to manage the financial
function of the Company. Executive shall also perform such other duties
(including but not limited to presentations at industry conferences) as are
assigned to Executive from time to time by the CEO. Executive's duties will be
performed at the Company's corporate headquarters in Louisville Kentucky,
subject to such travel as may be reasonably required for the performance of
Executive's duties or as may be requested by the CEO.
3. Extent of Services. Subject to the direction and control of the
CEO, Executive shall have the power and authority commensurate with his
executive status and necessary to perform his duties hereunder. The Company
shall provide Executive the resources necessary to perform his duties hereunder,
as determined by the Company in its sole discretion. During the Term, Executive
shall devote his entire working time, attention, labor, skill and energies in
the business of the Company, and shall not, without the consent of the Company,
be actively engaged in any other business activity, whether or not such business
activity is pursued for gain, profit or other pecuniary advantage.
4. Compensation. As compensation for services hereunder rendered,
Executive shall receive during the Term:
(a) Base Salary. An annual base salary ("Base Salary") of not
less than $250,000, payable in equal installments in accordance with
the Company's normal payroll procedures. Executive may receive
increases in his Base Salary from time to time, as approved by the CEO
and the Compensation Committee of the Board of Directors of the
Company. Base Salary of Executive will first be reviewed in 2003 for
Base Salary to be paid in calendar year 2004.
(b) Annual Bonus. The Company shall pay or cause to be paid to
Executive an annual cash bonus ("Annual Bonus") in accordance with the
terms hereof for each calendar year which begins during the Term.
(i) For the 2002 calendar year, the Executive shall be
eligible for an Annual Bonus in an amount determined in the
discretion of the Company taking into account the Company's
achievement of corporate performance goals and the portion of
the year 2002 Executive is an employee of the Company and such
other factors as the Company in its discretion deems relevant.
(ii) For the calendar years 2003 and 2004, Executive will
be included in the Ventas, Inc. annual bonus plan, policy or
program for senior executives on the terms and conditions
thereof in effect from time to time.
5. Benefits.
(a) Executive shall be entitled to participate in the Company's
2000 Incentive Compensation Plan or such successor long-term incentive
plan as may be in effect form time to time (any or all of which, the
"LTIP"), and be granted awards under such terms and conditions as may
be determined by the Committee (as defined in the LTIP) from time to
time. Subject to the approval of the Committee, for the calendar year
2003 Executive shall be granted a long-term incentive award that shall
have a value, as determined by the Committee in its discretion
exercised in good faith, of 50% of Base Salary at minimum individual
and Company performance, a value of 100% of Base Salary at target
individual and Company performance, and a maximum value of 200% of
Base Salary. The actual amount of such award, ranging from 50% to 200%
of Executive's Base Salary, and the portions thereof comprising
options, restricted stock or other equity interests, shall be
determined by the Committee in its discretion in accordance with the
LTIP. The methodology for the valuation of Options for the Executive
and allocation of any award amongst equity interests for the Executive
shall be consistent with that methodology utilized by the Committee
for other members of senior management of the Company.
(b) Executive shall be entitled to participate in the Ventas,
Inc. 401(k) Retirement Savings Plan (the "401(k) Plan"), Deferred
Compensation Plan (if any), medical, dental, long term disability, and
group life insurance coverages and fringe benefit plans, policies,
practices, and programs, from time to time in effect for executives of
the Company and its affiliates in accordance with the terms and
conditions thereof.
- 2 -
(c) Commencing January 1, 2003, Executive shall be entitled to
four weeks of paid vacation per calendar year, in accordance with the
Company's vacation plan, policy or program in effect from time to
time, at a time or times mutually agreed between Executive and the
CEO.
(d) Executive may incur reasonable expenses for promoting the
Company's business, including expenses for entertainment, travel and
similar items. The Company shall reimburse Executive for such
reasonable expenses upon receipt by the Company of accounting in
accordance with the Company's reimbursement policies and procedures in
effect from time to time.
6. Termination of Employment.
(a) Death or Disability. Executive's Employment shall terminate
automatically upon Executive's death during the Term. If the Company
determines in good faith that the Disability (as defined below) of
Executive has occurred during the Term, it may give to Executive
written notice of its intention to terminate Executive's employment.
In such event, Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by Executive
(the "Disability Effective Date"), provided that, within the 30 days
after such receipt, Executive shall not have returned to full-time
performance of Executive's duties. For purposes of this Agreement,
"Disability" shall mean a mental or physical condition which, in the
opinion of the Company, renders Executive with or without reasonable
accommodation unable or incompetent to carry out his material job
responsibilities which he held or the material duties he was assigned
at the time the disability was incurred, which has existed for at
least three months and which in the opinion of a physician selected by
the Company is expected to be permanent or to last for an indefinite
duration or a duration in excess of six months.
(b) Cause. The Company may terminate Executive's employment
during the Term for Cause. For purposes of this Agreement, "Cause"
shall mean (i) the Executive's indictment for, conviction of, or plea
of nolo contendere to, any felony or a misdemeanor involving fraud,
dishonesty or moral turpitude; (ii) the Executive's willful or
intentional material breach by Executive of his duties and
responsibilities; (iii) the Executive's willful or intentional
material misconduct by Executive in the performance of his duties
under this Agreement, or willful or intentional failure to comply with
any written instruction or directive of the CEO; or (iv) the
prohibition of Executive's serving as an officer or Chief Financial
Officer of the Company by order of any United States federal or state
agency or by order of any federal or state court. Any act, or failure
to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of the Company.
(c) Good Reason. Executive may terminate his employment during
the Term for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean any of the following:
(i) the assignment to the Executive of any duties
materially and adversely inconsistent with the Executive's
position (including offices, titles, reporting requirements or
responsibilities), authority or duties as prescribed by
- 3 -
Section 2 or the Company's requiring the Executive to be based
at any office or location other than the location described in
Section 2 or any other action by the Company which results in
a diminution or other material adverse change in such
position, authority or duties;
(ii) the failure to pay Guaranteed Base Salary in at
least the amount prescribed by Section 4(a);
(iii) the failure to provide Annual Bonus opportunity
prescribed by Section 4(b);
(iv) the failure to provide any equity award, plan or
fringe benefits or perquisites prescribed by Section 5;
(v) any other material adverse change to the terms and
conditions of the Executive's employment (whether or not also
described in clauses (a) through (c) above);
(vi) a failure by the Company to cause a successor, prior
to or as of the date it becomes a successor, to assume and
agree to perform this Agreement in accordance with the
provisions of Section 1l(c);
which in each case is not cured within thirty (30) days after written
notice from Executive to the Company setting forth in reasonable
detail the facts and circumstances claimed to constitute Good Reason
and affording an opportunity to cure. Any termination of employment by
the Executive for Good Reason shall be communicated to the Company by
Notice of Termination in accordance with this Agreement. The passage
of time not in excess of 12 months after the Executive has actual
knowledge of an act or omission which constitutes Good Reason prior to
delivery of Notice of Termination or a failure by the Executive to
include in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason shall not waive any right of
the Executive under this Agreement or preclude the Executive from
asserting such fact or circumstance in enforcing rights under this
Agreement.
(d) Notice of Termination. Any termination by the Company for
Cause or by the Executive for Good Reason shall be communicated by
notice (a "Notice of Termination") given in accordance with this
Agreement. For purposes of this Agreement, a Notice of Termination
means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination by the Company (for Cause) or by the Executive (with Good
Reason) of Executive's employment under the provision so indicated,
and (iii) specifies the intended termination date. The failure by the
Company or Executive to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Cause or Good
Reason shall not waive any right of the Company, respectively,
hereunder or preclude the Company or Executive, respectively, from
asserting such fact or circumstance in enforcing their respective
rights hereunder.
- 4 -
(e) Date of Termination. "Date of Termination" means (i) if
Executive's employment is terminated by the Company for Cause or by
the Executive for Good Reason, the date specified in the Notice of
Termination, (ii) if Executive's employment is terminated by the
Company other than for Cause or Disability, the Date of Termination
shall be the date on which the Company notified Executive of such
termination, (iii) if Executive resigns other than for Good Reason,
the Date of Termination shall be the date 60 days after Executive
notified the Company of such termination and (iv) if Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of Executive or the Disability
Effective Date, as the case may be.
7. Obligations of the Company Upon Termination. Following any
termination of Executive's employment hereunder except for a termination in
connection with a Change of Control (defined below) covered by Section 8 hereof,
the Company shall pay Executive his Base Salary through the Date of Termination
and any amounts accrued or owed (but yet unpaid) to Executive pursuant to the
terms and conditions of the executive benefit plans and programs of the Company
at the time such payments are due, including accrued and unpaid vacation. In
addition, subject to Executive's execution of a general release of claims in
form substantially similar to the form attached hereto as Attachment A (the
"Release"), Executive shall be entitled to the following additional payments:
(a) Death or Disability. If, during the Term, Executive's
employment shall terminate by reason of Executive's death or
Disability, the Company shall pay to Executive (or his designated
beneficiary or estate, as the case may be) the prorated portion of the
Annual Bonus Executive would received for the year of termination of
employment assuming maximum individual and Company performance (the
"Maximum Annual Bonus"), in an amount equal to the product of such
Maximum Annual Bonus multiplied by a fraction, the numerator of which
is the number of days in the year of the termination of employment
during which Executive was employed by the Company and the denominator
of which is 365. Such amount shall be paid within 30 days of the date
when such amounts would otherwise have been payable to the Executive
if Executive's employment had not terminated (but not earlier than the
date the Release becomes irrevocable).
(b) Other than for Cause, or for Good Reason. If, during the
Term, the Company shall terminate Executive's employment other than
for Cause (but not for Disability), or if the Executive shall
terminate his employment for Good Reason,
(1) The Company shall pay Executive within 30 days of
the date of termination of employment (but not earlier than the
date on which the Release becomes irrevocable) a lump sum
payment equal to the sum of (A) one year of Executive's annual
Base Salary as then in effect plus (B) Executive's Maximum
Annual Bonus for the year of termination.
(2) Executive shall be treated as having one additional
year of service for purposes of vesting in restricted stock then
outstanding and not yet fully vested, and the duration within
which any option awarded to Executive then outstanding and
vested and exercisable may be exercised shall be extended by one
year (but not beyond the maximum duration for options permitted
by the LTIP).
- 5 -
(3) During the one-year period beginning on the Date of
Termination (the "Severance Period"), the Company shall provide
Executive with continued medical, dental, long-term disability
and life insurance benefits at the same levels as if he remained
actively employed during the Severance Period; provided that
Executive shall not participate in any bonus, vacation pay,
retirement benefits, long-term incentive, stock option or other
equity grant plan, program or arrangement after the Date of
Termination, provided farther, if Executive is unable to
participate in such benefit plans as offered by the Company to
active employees, the Company will pay to Executive the premium
cost which the Company pays for similarly situated active senior
management employees; provided farther, that Executive shall pay
the Company on a monthly basis the portion of the periodic cost
of such continued coverage equal to the dollar amount of such
periodic cost as if he remained employed during the Severance
Period; provided farther, that such welfare benefits shall be
reduced to the extent Executive receives similar benefits from a
subsequent employer. As and to the extent provided by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), Executive will be eligible to continue his
health insurance benefits at his own expense for the statutory
period prescribed by COBRA following the "qualifying event" (as
defined in COBRA) occurring at the end of Severance Period and,
later, to the extent provided in such benefit plan, program or
arrangement, to convert such benefits to an individual policy.
(4) Executive shall become immediately vested in all
accounts or accrued benefits under any defined contribution plan
or program qualified under Section 401 (a) of the Internal
Revenue Code of 1986, as amended, including without limitation
the 401(k) Plan; provided that to the extent such vesting is not
allowed pursuant to the terms of such plans, the Company shall
pay to Executive an amount equal to the sum of the value of the
unvested portion of such accounts or accrued benefits as of the
Date of Termination and forfeited by Executive due to
termination of employment.
(c) Cause; Executive Resignation. If Executive's employment
shall be terminated by the Company for Cause or by the Executive other
than for Good Reason (and other than due to Executive's death), during
the Term, this Agreement shall terminate without further additional
obligations to Executive under this Agreement, provided that the
Company shall pay to Executive his Base Salary through the Date of
Termination.
(d) Death after Termination. In the event of the death of
Executive during the period Executive is receiving payments pursuant
to this Agreement, Executive's designated beneficiary shall be
entitled to receive the balance of the payments, or in the event of no
designated beneficiary, the remaining payments shall be made to
Executive's estate.
8. Occurrence of a Change in Control.
(a) Termination Other than for Cause, or for Good Reason. If
during the Term a Change of Control (as defined below) shall occur and
within one year from the
- 6 -
date of the occurrence of such Change of Control the Company shall
terminate Executive's employment other than for Cause or the Executive
shall terminate his employment for Good Reason (a "Change of Control
Severance"), subject to Executive's execution of the Release and in
lieu of the benefits under Section 7 hereof,
(1) The Company shall pay Executive within 30 days of
the date of termination of employment (but not earlier than the
date on which the Release becomes irrevocable) a lump sum
payment equal to two (2) times the sum of (A) one year of
Executive's annual Base Salary as then in effect, plus (B)
Executive's Maximum Annual Bonus for the year of termination,
plus (C) the fair market value (determined as of the Date of
Termination) of the maximum number of shares of restricted stock
authorized to be granted to Executive under the LTIP in the year
of termination assuming all performance criteria for such award
were deemed satisfied.
(2) All options held by Executive for which the exercise
period has not yet lapsed or expired shall become fully vested
and exercisable and all restricted stock held by Executive shall
become fully vested.
(3) During the two (2) year period commencing on the
date of the Change of Control Severance the Company shall
provide Executive with continued medical, dental, long-term
disability and life insurance benefits at the same levels as if
he remained actively employed during the Severance Period;
provided that Executive shall not participate in any bonus,
vacation pay, retirement benefits, long-term incentive, stock
option or other equity grant plan, program or arrangement after
the Date of Termination, provided further, if Executive is
unable to participate in such benefit plans as offered by the
Company to active employees, the Company will pay to Executive
the premium cost which the Company pays for similarly situated
active senior management employees; provided further, that
Executive shall pay the Company on a monthly basis the portion
of the periodic cost of such continued coverage equal to the
dollar amount of such periodic cost as if he remained employed
during the Severance Period; provided further, that such welfare
benefits shall be reduced to the extent Executive receives
similar benefits from a subsequent employer. As and to the
extent provided by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), Executive will
be eligible to continue his health insurance benefits at his own
expense for the statutory period prescribed by COBRA following
the "qualifying event" (as defined in COBRA) occurring at the
end the two (2) year period and, later, to the extent provided
in such benefit plan, program or arrangement, to convert such
benefits to an individual policy.
(4) Executive shall become immediately vested in all
accounts or accrued benefits under any defined contribution plan
or program qualified under Section 401 (a) of the Internal
Revenue Code of 1986, as amended, including without limitation
the 401(k) Plan; provided that to the extent such vesting is not
allowed pursuant to the terms of such plans, the Company shall
pay to Executive an amount equal to the sum of the value of the
unvested portion of
- 7 -
such accounts or accrued benefits as of the Date of Termination
and forfeited by Executive due to termination of employment.
(b) For purposes of this Agreement, a "Change in Control" means
the occurrence of any of the following events:
(1) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "1934 Act") and used in
Section 13(d) and 14(d) thereof, including a "group as defined
in Section 13(d)) immediately after which such Person has
"Beneficial Ownership" (within the mean of Rule 13d-3 under the
0000 Xxx) of 35% or more of the combined voting power of
Company's then outstanding Voting Securities; provided, however,
that in determining whether a Change in Control has occurred,
Voting Securities which are acquired in an acquisition by (i)
the Company or any of its subsidiaries, (ii) an employee benefit
plan (or a trust forming a part thereof) maintained by the
Company or any of its subsidiaries or (iii) any Person in
connection with an acquisition referred to in the preceding
clause (i), shall not constitute an acquisition which would
cause a Change in Control.
(2) The individuals who, as of August 5, 2002,
constituted the Board of Directors of the Company (the
"Incumbent Board") cease for any reason to constitute over 50%
of the Board; provided, however, that if the election, or
nomination for election by the Company's stockholders, of any
new director was approved by a vote of over 50% of the Incumbent
Board, such new director shall, for purposes of this Section
8(b), be considered as though such person were a member of the
Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule
14a-ll promulgated under the 0000 Xxx) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board of Directors of the Company (a
"Proxy Contest"), including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest.
(3) Consummation of a merger, consolidation or
reorganization involving the Company, unless each of the
following events occurs in connection with such merger,
consolidation or reorganization:
(i) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation or
reorganization, over 50% of the combined voting power of all
voting securities of the corporation resulting from such merger
or consolidation or reorganization (the "Surviving Company")
over which any Person has Beneficial Ownership in substantially
the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization.
- 8 -
(ii) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute over 50% of the members of the board of directors of
the Surviving Company; and
(iii) no Person (other than the Company, any of its
subsidiaries, any employee benefit plan (or any trust forming a
part thereof) maintained by the Company, the Surviving Company
or any Person who, immediately prior to such merger,
consolidation or reorganization had Beneficial Ownership of 35%
or more of the then outstanding Voting Securities) has
Beneficial Ownership of 35% or more of the combined voting power
of the Surviving Company's then outstanding voting securities.
(4) Approval by the Company's stockholders of a complete
liquidation or dissolution of the Company.
(5) Approval by Company's stockholders of an agreement
for the sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a transfer
to a subsidiary of the Company).
(6) Any other event that the Board shall determine
constitutes an effective Change in Control of Company.
(7) Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the
"Subject Person") acquired Beneficial Ownership of more than the
permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned
by the Subject Person; provided that if a Change in Control
would occur (but for the operation of this sentence) as a result
of the acquisition of Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional Voting Securities
which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
9. Restrictive Covenants.
(a) Confidentiality.
(i) Executive shall not, unless written permission is
granted by the Company, disclose to or communicate in any manner
with the press or any other media about his employment with the
Company, the terms of this Agreement, the termination of his
employment with the Company, the Company's businesses or
affairs, the Company's officers, directors, employees and/or
consultants, or any matter related to any of the foregoing.
(ii) Executive acknowledges that it is the policy of the
Company and its subsidiaries to maintain as secret and
confidential all valuable and unique
- 9 -
information and techniques acquired, developed or used by the
Company and its subsidiaries relating to their business,
operations, actual or potential products, strategies, potential
liabilities, employees, tenants, proposed or perspective tenants
and customers, business partners and customers, (including
without limitation information protected by the company's
attorney/client, work product, or tax advisor/audit privileges;
tax matters and information; financial analysis models; the
Company's strategic plans; negotiations with third parties;
methods, policies, processes, formulas, techniques, know-how and
other knowledge; trade practices, trade secrets, or financial
matters; lists of customers or customers' purchases; lists of
suppliers, manufacturers, representatives, or other
distributors; lists of and information about tenants;
requirements for systems, programs, machines, or their
equipment; information regarding the Company's bank accounts,
credit agreement or financial projections information;
information regarding the Company's directors or officers or
their personal affairs) which gives the Company and its
subsidiaries a competitive advantage in the businesses in which
the Company and its subsidiaries are engaged ("Confidential
Information"). "Confidential Information" shall not include
information that (A) is or becomes generally available to the
public other than as a result of a disclosure by Executive in
violation of this Agreement, (B) was available to Executive on a
non-confidential basis prior to the date hereof, or (C) is
compelled to be disclosed by a court or governmental agency,
provided that prior written notice is given to the Company and
Executive cooperates with the Company in any efforts by the
Company to limit the scope of such obligation and/or to obtain
confidential treatment of any material disclosed pursuant to
such obligation. Executive recognizes that all such Confidential
Information is the sole and exclusive property of the Company
and its subsidiaries, and that disclosure of Confidential
Information would cause damage to the Company and its
subsidiaries. Executive shall not disclose, directly or
indirectly, any Confidential Information obtained during his
employment with the Company, and will take all necessary
precautions to prevent disclosure, to any unauthorized
individual or entity inside or outside the Company, and will not
use the Confidential Information or permit its use for the
benefit of Executive or other third party other than the
Company. These obligations shall continue for so long as the
Confidential Information remains Confidential Information.
(b) Noncompetition, Nonsolicitation, Noninterference. Executive
shall not during the Term, and during the one-year period after the
termination of Executive's employment with the Company for any reason
(the "Restricted Period"), either directly or indirectly (through
another business or person) engage in or facilitate any of the
following activities anywhere in the United States:
(i) hiring, recruiting, engaging as a consultant or
adviser, employing or attempting or soliciting to hire, recruit
or employ any person employed by the Company or any subsidiary,
or causing or attempting to cause any third party to do any of
the foregoing;
- 10 -
(ii) causing or attempting to cause any person employed
at any time during the Restricted Period by the Company or any
subsidiary to terminate his or her relationship with the Company
or any subsidiary;
(iii) soliciting, enticing away, or endeavoring to entice
away, or otherwise interfering with any employee, customer,
tenant or proposed tenant with whom the Company has ongoing
contact, financial partner or proposed financial partner with
whom the Company has ongoing contact, vendor, supplier or other
similar business relation, who at any time during the Restricted
Period or who which at any time during the period commencing one
year prior to the Date of Termination, to the Executive's
knowledge, maintained a material business relationship with the
Company or any subsidiary or with whom the Company is targeting
for a material business relationship or is engaged in
discussions with to commence a material business relationship;
or
(iv) performing services as an employee, director,
officer, consultant, independent contractor or advisor; or
investing in, whether in the form of equity or debt, owning any
interest or otherwise having an ownership or other interest or a
connection to any healthcare REIT (real estate investment
trust), or any person which owns in excess of five percent of
the issued and outstanding equity interest of a healthcare REIT,
or any other company, entity or person that directly and
materially competes with the Company anywhere in the United
States. Nothing in this Section (iv) shall, however, restrict
Executive from (A) making an investment in and owning up to
one-percent (1%) of the common stock of any company whose stock
is listed on a national exchange, provided that such investment
does not give Executive the right or ability to control or
influence the policy decisions of any direct competitor, or (B)
performing services as an employee, director, officer,
consultant, independent contractor or advisor of an operating
company which provides goods or services other than leasing or
otherwise providing real estate and related personal property
(for example, a hospital).
(c) Other Prohibited Activities. Executive acknowledges that his
position at the Company provides him with access to highly sensitive
information concerning the Company's principal lessee and its
affiliates and leases to such lessee and its affiliates which are
critical to the Company's ability to effectively function and to the
properties to be purchased by the Company, and that if Executive were
to provide services for such principal lessee and/or its' affiliates
such services would cause irreparable damages to the Company.
Executive shall not during the Term and the Restricted Period, either
directly or indirectly (through another business or person) engage in
or facilitate any of the following activities anywhere in the United
States or in any location outside the United States where the Company
conducts or plans to conduct business: performing services as an
employee, director, officer, consultant, independent contractor or
advisor; or investing in, whether in the form of equity or debt,
owning any interest or otherwise having an ownership or other interest
or a connection to Kindred Healthcare, Inc. or any of its parent,
sister, subsidiary or affiliated entities in any manner, including
without limitation as an owner, principal, partner, officer, director,
stockholder, employee, consultant, contractor, agent, broker,
representative or otherwise (unless Executive becomes a
- 11 -
stockholder in Kindred Healthcare as part of a restructuring of
Kindred Healthcare where the Company's stockholders receive Kindred
Healthcare stock); provided, however, that this subsection (c) shall
not be preclude Executive from owning (whether during or after the
Term) any equity or debt interest in Kindred Healthcare to which he
became entitled by reason of his employment by Kindred Healthcare
prior to his employment by the Company.
(d) Non-Disparagement.
(i) Executive agrees not to make, or cause to be made,
any statement, observation or opinion, or communicate any
information (whether oral or written, directly or indirectly)
that (A) accuses or implies that the Company and/or any of its
affiliates, together with their respective present or former
officers, directors, partners, stockholders, employees and
agents, and each of their predecessors, successors and assigns,
engaged in any wrongful, unlawful, unethical or improper
conduct, whether relating to Executive's employment (or
termination thereof), the business or operations of the Company,
or otherwise; or (B) disparages, impugns or in any way reflects
adversely upon the business, good will, products, business
opportunities, competency, character, behavior or reputation of
the Company and/or any of its affiliates, together with their
respective present or former officers, directors, partners,
stockholders, employees and agents, and each of their
predecessors, successors and assigns.
(ii) Nothing herein shall be deemed to preclude Executive
or the Company from providing truthful testimony or information
pursuant to subpoena, court or other similar legal process.
(e) New Employer. Executive shall provide the terms and
conditions of this Section 9 to any prospective new employer or new
employer and shall permit the Company to contact any such company,
entity or individual to confirm Executive's compliance with this
Section 9 and shall provide the Company with such information as it
requests to allow such inquiry.
(f) Reasonableness of Restrictive Covenants.
(i) Executive acknowledges that the covenants contained
in this Section 9 are reasonable in the scope of the activities
restricted, the geographic area covered by the restrictions, and
the duration of the restrictions, and that such covenants are
reasonably necessary to protect the Company's legitimate
interests in its confidential Information, its reputation, and
in its relationships with its employees, customers, and
suppliers.
(ii) The Company has, and the Executive has had an
opportunity to, consult with their respective legal counsel and
to be advised concerning the reasonableness and propriety of
such covenants. Executive acknowledges that his observance of
the covenants contained herein will not deprive Executive of the
ability to earn a livelihood or to support his dependents.
- 12 -
(g) Right to Injunction. In recognition of the confidential
nature of the Confidential Information, and in recognition of the
necessity of the limited restrictions imposed by Section 9, Executive
and the Company agree that it would be impossible to measure solely in
money the damages which the Company would suffer if Executive were to
breach any of his obligations hereunder. Executive acknowledges that
any breach of any provision of this Agreement would irreparably injure
the Company. Accordingly, Executive agrees that if he breaches any of
the provisions of Section 9, the Company shall be entitled, in
addition to any other remedies to which the Company may be entitled
under this Agreement or otherwise, to an injunction to be issued
without bond by a court of competent jurisdiction, to restrain any
breach, or threatened breach, of any provision of Section 11, and
Executive hereby waives any right to assert any claim or defense that
the Company has an adequate remedy at law for any such breach or to
require the Company to post bond or other security during the pendancy
of such injunction.
(h) Assistance. During the one-year period following a termination
of Executive's employment with the Company, Executive shall from time
to time provide the Company with such reasonable assistance and
cooperation as the Company may reasonably from time to time request in
connection with any financial and business issues, investigation,
claim, dispute, judicial, legislative, administrative or arbitral
proceeding, or litigation (any of the foregoing, a "Proceeding")
arising out of matters within the knowledge of Executive and related
to his position as an employee of the Company. Such assistance and
cooperation shall include providing information, declarations or
statements to the Company, signing documents, meeting with attorneys
or other representatives of the Company, and preparing for and giving
truthful testimony in connection with any Proceeding or related
deposition. Executive shall agree to also make himself available to
assist the Company with transition of Executive's duties to his
successor and addressing ongoing issues and problems. In any such
instance, Executive shall provide such assistance and cooperation at
times and in places mutually convenient for the Company and Executive
and which do not unreasonably interfere with Executive's business or
personal activities. The Company shall reimburse Executive's
reasonable out-of-pocket costs and expenses in connection with such
assistance and cooperation upon Executive's written request in such
form and containing such information as the Company shall reasonably
request.
10. Disputes. Any dispute or controversy arising under, out of, or in
connection with this Agreement shall, at the election and upon written demand of
the Company, be finally determined and settled by binding arbitration in the
City of Louisville, Kentucky, in accordance with the commercial arbitration
rules and procedures of the American Arbitration Association, and judgment upon
the award may be entered in any court having jurisdiction thereof. Each party
shall bear its own costs, legal fees and other expenses respecting such
arbitration; provided, however, if one party shall prevail in the claims in such
arbitration, the non-prevailing party shall pay the prevailing party's costs,
legal fees and other expenses respecting such arbitration.
11. Successors.
(a) This Agreement is personal to Executive and without the
prior written consent of the Company shall not be assignable by
Executive otherwise than by will or the laws
- 13 -
of descent and distribution. This Agreement shall inure to the benefit
of and be enforceable by Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, or any
business of the Company for which Executive's services are principally
performed, to assume expressly and agree to perform this Agreement in
the same manner and to the same amount that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, "Company" shall mean the Company as herein before
defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
12. Other Severance Benefits. Executive hereby agrees that in
consideration for the payments to be received under Section 7 or 8 of this
Agreement, Executive waives and all rights to any payments or benefits under any
plans, programs, contracts or arrangements of the Company or their respective
affiliates that provide for severance payments or benefits upon a termination of
employment.
13. Certain Additional Payments by the Company. If Executive becomes
entitled to any payments or benefits pursuant to the terms of or by reason of
this Agreement (in the aggregate, "Payments" or singularly, "Payment"), which
Payments are subject to the tax imposed by Section 4999 or any successor
provision of the Code or any similar state or local tax (such excise tax is
hereinafter referred to as the "Excise Tax"), the Company shall pay Executive
an additional amount ("Gross-Up Payment") such that the net amount retained by
Executive, after deduction or payment of (i) any Excise Tax on Payments, and
(ii) any federal, state and local income tax and Excise Tax upon the payment
provided for by this Section, shall be equal to the full amount of the Payments.
Notwithstanding the foregoing provisions of this Section 13, if it shall be
determined that Executive is entitled to the Gross-Up Payment, but that the
Parachute Value (defined below) of all Payments does not exceed 110% of the Safe
Harbor Amount (defined below), then except as provided below, no Gross-Up
Payment shall be made to Executive and the amounts payable under this Agreement
shall be reduced (but not below zero) so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount. Such reduction, if
applicable, shall be made by first reducing the payments under Section 8(a)(l)
unless an alternative method of reduction is elected by Executive, and in any
event shall be made in such a manner as to maximize the value of all Payments
actually made to Executive. For purposes of this Section 13, the "Parachute
Value" of a Payment means the present value, as of the date of the Change of
Control, for purposes of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), of the portion of such Payment that is a "parachute
payment" under Section 280G (b)(2) of the Code; and the "Safe Harbor Amount"
means 2.99 times Executive's "base amount" within the meaning of Section
280G(b)(3) of the Code.
14. Withholding. The Company may withhold all applicable required
federal, state, local and other employment, income and other taxes from any and
all payments to be made pursuant to this Agreement.
- 14 -
15. No Mitigation. Executive shall have no duty to mitigate his
damages by seeking other employment and, should Executive actually receive
compensation from any such other employment, the payments required hereunder,
shall not be reduced or offset by any such compensation except that the welfare
benefits provided pursuant to Section 7(b)(3) shall be reduced as provided by
Section 7(b)(3) to the extent Executive receives similar benefits from a
subsequent employer.
16. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered or sent by telephone facsimile transmission, personal or overnight
couriers, or registered mail with confirmation of receipt, addressed as follows:
If to Executive: at the most recent address on file with the Company.
If to Company:
Ventas, Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn.: General Counsel
17. Waiver of Breach and Severabilitv. The waiver by either party of a
breach of any provision of this Agreement by the other party shall not operate
or be construed as a waiver of any subsequent breach by either party. In the
event any provision of this Agreement is found to be invalid or unenforceable,
it may be severed from the Agreement and the remaining provisions of the
Agreement shall continue to be binding and effective.
18. Entire Agreement; Amendment. This instrument contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations and warranties between them, wither written or
oral, with respect to the subject matter hereof. No provisions of this Agreement
may be modified, waived or discharged unless such modification, waiver or
discharge is agreed to in writing signed by Executive and the Company.
19. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the Kentucky without regard to its choice of
law principles.
20. Headings. The headings in this Agreement are for convenience only
and shall not be used to interpret or construe its provisions.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
- 15 -
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
VENTAS, INC.
By: /s/ T. Xxxxxxx Xxxxx
---------------------------------
T. Xxxxxxx Xxxxx
Executive Vice President and
General Counsel
/s/ Xxxxxxx X. Xxxxxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxxxxx
Executive
- 16 -
